How to trade stocks for a living

Recently I visited Pace University’s investment club to talk about the life of a proprietary trader. Our firm makes an effort to reach out to college trading and investment clubs to meet their members. Some of our best traders have come from these clubs. Plus, college students rarely get to interact with a professional trader so sharing our experience is helpful.

At my presentation for Pace, a sharp member asked, “How do you recommend we get started trading?” It’s a great question. Here’s my answer:

  1. Read, read, read about markets and trading.  New traders need to build their domain knowledge of markets and trading, and a great way to start is by reading. Read books. See 20 books every trader should read. Read blogs. See Traders’ Favorite Trading Blogs. Read magazines. Visit financial websites. See Top Financial websites to prepare for your trading day. Build a foundation of knowledge.
  2. Train to trade. Take a trader training program. Theses course can help you skip some mistakes others have made. They can help you save losing thousands of dollars in the markets when you first start. And they can expose you to trades worth studying. See Unconventional Training for the Unconventional Trader.
  3. Paper trade. Start by paper trading. See The Best Paper Trading Tools to Succeed as a Trader. Experiment with different trading systems with fake money. When you find one that works for you, then and only then, take the next step.
  4. Trade with real money. Paper trading is very different than trading live. I have seen some of the greatest paper traders ever start at our firm, and then never make a dime trading. In fact, the first person we ever hired at SMB was a superstar on the demo. When he traded live, he lost every day. It got to the point where we thought he was purposely losing money! Start small with small risk and bump your size after only periods of success. Bump your risk only after you have demonstrated clear edge.

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